Bridging Islands of Facts in an Ocean of Uncertainty

 

 

There’s no longer much of an argument over the need to measure marketing performance. Face it, the left-brainers have won at least the battle, if not the war. But just how are CMOs faring with their new measurement-driven agendas?

The short answer is: So far, so good. Marketing leaders point to more focused initiatives, a better handle on their investments, even improved relations with an old nemesis — finance — as a result of their marketing dashboard initiatives. But they also admit that there’s still much work to do, not just with what they’re measuring, but also in how they’re sharing those results with the rest of the organization.

The internal credibility gap, in fact, remains one of the more significant barriers for many marketing organizations and their performance-measurement efforts. Despite the advances many CMOs have made in improving the accountability of their marketing spend, the perception of marketing as a cost center persists in many large organizations. No surprise, then, that marketing teams who have implemented successful dashboard initiatives — and proven their worth as a strategic partner in the growth agenda — cite a tight relationship with finance as a critical piece of the puzzle. The approaches vary, but the rationale is consistent: Without alignment and support from finance, the dashboards will have little impact.

“The head of finance and I are completely attached at the hip,” says Cammie Dunaway, chief marketing officer at Yahoo! “The way we look at [metrics such as] lifetime value or ROI is all very connected to the P&L.” At Yahoo!, a marketing finance team — physically located in marketing but reporting to finance — oversees the reporting function. “We have built out a finance organization within marketing, and they are the owners of the reporting,” Dunaway says.

Finance also owns the dashboard programs at The Home Depot. The retailer’s senior vice president and CMO, Roger Adams, partnered with a senior vice president in finance, and they decided that marketing’s dashboards would have more internal credibility if they came from outside the department.

"If [the dashboard] was seen as marketing’s view of marketing, it could be jaded or questioned,” says Adams. “We wanted to have a totally unbiased look coming from the financial group. We counsel [finance] on our marketing objectives, but they own the dashboard.”

Another large retailer, Office Depot, takes a slightly different approach. While marketing and finance are closely aligned, the marketing team is fully accountable for delivering on the group’s performance objectives.

“In some organizations, finance might demand that accountability, so it might feel like an obligation [for marketing],” says Tony Ueber, the office supply retailer’s senior vice president of marketing. “But marketing leads the efforts here. We’ve partnered closely with finance on it, and they have full transparency and are partners in the decision making. But we’ve always led it and embraced it.”

Finance is not the only internal function where strong relations are critical to marketing’s performance measurement programs. At KeyCorp, CMO Karen Haefling and her team focus on aligning their objectives with high-priority “blue-chip” initiatives at both a corporate and line-of-business (LOB) level.

“We’ve translated the corporate and LOB blue chips into our own list of blue chips,” she explains. “We’re trying to get our scorecards and LOB scorecards to mirror one another. The more [aligned] we can get them, the more successful we will be.”

The best way to foster that alignment, she adds, is to get in sync with the business leaders before the objectives are in place. “What we really want to do is create shared goals upfront instead of creating our goals in a vacuum.”

Dunaway agrees that getting upfront buy-in is vital for future success. “Even coming up with the dashboard is a great process of aligning people around what’s most important in the company,” she says. When Dunaway’s team was examining metrics for engagement, for example, the group defined a handful of options, vetted them with senior executives, and together they reached consensus on the ones that would most benefit the business.

Design Decisions
Deciding which metrics to track is only part of the equation. Marketers also must decide how to distribute the results, and to whom. Companies continue to work through the nuances of shaping dashboards and scorecards for the broad range of individuals and groups who consume them: the CEO and the board, department heads and LOB leaders, and the multitude of teams within the marketing organization itself.

Whereas the executive team doesn’t need to see detailed campaign execution reports, online production groups will need to dive deeply into the metrics of Web site usability. “The challenge is always how you synthesize the data you have and make it user-friendly for the people who need to make the decisions,” says Ueber. “The balance is getting the right level of reporting for the appropriate target audience, based on what they need. Any information we provide has to be relevant, timely, and actionable.”

The best way to determine which reports different groups require? Try talking to them. “We spend a lot of time looking at dashboard design,” says David Churbuck, vice president of global Web marketing at Lenovo. “Our analysts will reach out to the stakeholders, ask them what’s really important to them, and build them a dashboard that’s delivered at various frequencies. For some executives, a traditional red/yellow/green summary will suffice. Others want more granularity.”

Churbuck’s Web production team, for example, looks at detailed design and usability decisions. At the country level, the Web marketing group tracks everything from revenue to site traffic to convergence. Then there are the traditional e-commerce metrics: cart checkout, average order revenue, and percent of conversion from traffic in to sales out.

At Bank of America, marketing analysts have developed various dashboards that offer multiple views of customer segments, geographies, and competitors. “We’re trying to get points of view across all of our various lines of businesses, knowing, for example, that the issues around the consumer business can be very different than those around the wealth management business,” says Bob Calamari, senior vice president of the bank’s brand marketing group.

“The number and types of views are restricted only by our imagination,” says Calamari. “We can provide summary roll-up views; we can cut at a geographic level and at a customer segment, or at a product level, or a competitor view. There are probably more.”

Yahoo! has a similarly broad mix of dashboards and scorecards, which fall into four main categories:

And that’s just at a corporate level. Scorecards in each of the business units show performance specific to that unit’s product line. The marketing team also has an array of campaign scorecards to track how the elements of marketing mix are driving traffic on the Yahoo! portal.

“We can get very timely and accurate data around our spend and what kind of value that’s driving from user behavior,” says Nick Besbeas, Yahoo!’s vice president of global direct marketing.

KeyCorp’s 2007 marketing plan has 14 major categories of metrics, ranging from shareholder value to direct marketing ROI to marketplace perception. Despite the breadth of measurements, Haefling has discovered an important lesson with her dashboard initiatives: Keep it simple.

“We have learned that less is more,” she says. “You need to focus on the things that are really going to make a difference in company performance, and not bean-count all the things that show you’re doing a nice job.”

On the flip side, marketing chiefs also must be pragmatic about the things they can’t measure. “You have to be realistic about trying to solve things that you don’t have control over, or where there may be gaps in information,” says Haefling.

 

The Art of Storytelling 
An important element of any marketing dashboard is the story that goes along with the analytics. CMOs agree that sending out a scorecard without supporting analysis — either in print or in person — won’t have much impact. “We don’t have just the metric,” says Haefling. “We also have a narrative to explain and an action plan for the next quarter.”

Or, as Calamari puts it, “We’re always trying to explain how the clock works as opposed to just telling them the time.”

At enterprise software developer CA, the marketing team collaborates with leaders of CA’s four major geographic regions to add an extra layer of insights onto a monthly global scorecard. Marketing pulls together relevant metrics for each region, formats the data, and sends it to executives from each region, who use the information to create a one-page summary that tells the story behind the numbers. “It would be very difficult from a centralized point [in marketing] to really understand what’s going on behind those numbers,” says Sean Goldstein, director of marketing for the Islandia, NY, company. Asking the regional leaders to provide the summary, he adds, “gives us a level of insight we wouldn’t otherwise get.

To make sure that key stakeholders hear — and understand — the story behind the metrics, most organizations proactively push their reports out to various teams, either by e-mail or in live presentations. Some also archive historical reports on secure internal Web sites. The combination of proactive reporting and a central repository for past results often reduces the volume of “how are we doing?” queries directed at the marketing team. “Users who need to see [the reports] are no longer relegated to bombarding me with e-mail,” says Calamari.

The frequency of the push depends on the report — and the recipients. “We push some dashboards out daily, some weekly, some monthly, depending on who they’re going to,” says Dunaway. “We try to get as much information as we can into the hands of people who can impact that information.”

At The Home Depot, stakeholders across the entire organization — including finance, operations, and merchandising — have online access to marketing’s dashboards, and Adams also provides an in-person summary in weekly meetings with the executive team.

This type of shared analysis opens the door toward one of the dashboard’s greatest benefits: its role as a conversation starter. “When you see a metric falling off, it’s a great call to action to have a conversation around what’s going on,” says Dunaway. “It’s terrific in helping drive focus, helping to clarify priorities, and helping to give you the right warnings when something is going off course.”

Adjusting the Mix
The ability to make midstream corrections is a critical by-product of the marketing dashboard. “Our goal is to detect events as close to real time as possible,” says Churbuck. “As soon as you ID it, you can correct it.”

Others are trying to be just as nimble. Yahoo! uses red/yellow/green thresholds as a guide to reallocate funds from underperformers toward more profitable investments each quarter. Bank of America’s marketers are using dashboards to fine tune the marketing mix across all categories. Through its performance measurement systems, BofA’s marketing team can gain greater insight, for example, in the effectiveness of TV vs. out-of-home advertising for a product campaign and make adjustments quickly toward the media that are proving more valuable.

“We’re getting more sophisticated around marketing-mix modeling and our ability to optimize various elements of marketing spend,” says Calamari. “That has opened up a whole world of possibilities to experiment with more refined degrees of spending.”

This more dynamic approach to spending is not a luxury; in the current environment, it’s increasingly a mandate. “We’re serving smaller platforms and niche audiences,” says Calamari. “A more proactively engaged consumer is tapping into information. Having a more sophisticated database around mix modeling is critical to optimizing our spend.”

Office Depot also does a heavy amount of test vs. control research to optimize its marketing mix. “We’re pretty disciplined about trying to apply measurement about all aspects,” says Ueber. “We’ve gotten a lot more sophisticated in the process from putting a return on everything that we do.” The tools enable Office Depot’s marketing team to look at the overall productivity of any vehicle — an insert in the Sunday paper, for instance — along with the effectiveness of each product advertised in that insert.

As modeling tools become more sophisticated, marketing organizations are getting closer to the Holy Grail: connecting marketing spend to business performance. “We’re trying hard to link brand results statistically to key business metrics — revenue, SVA, and unit volumes,” says Calamari. “We’re always trying to link our spending on the brand, media, and sponsorships to business outcomes.”

The Customer Metric
Many organizations are finding that any legitimate connection between marketing spend and business outcomes requires a shift from product-focused metrics to those centered around customer behaviors and attitudes.

At The Home Depot, for example, the ability to monitor the behavioral patterns of shoppers helps Adams and his team to complete the financial picture for their marketing spend. “We can see much greater depth of the performance of an event than we could in the past,” he says. The key metric is “average basket size” for the retailer’s weekly promotions. This accounts not just for sales of each advertised item — a gallon of paint, for example — but the additional items customers purchased while they were in the store. “If they just buy the promotion, that’s not successful,” Adams explains. “We’re looking at the full [shopping] basket to help us understand the long-term benefit of that customer.”

Putting some structure around those qualitative elements, however, is proving to be a difficult nut to crack for many senior marketers — even those in the metrics-heavy online environment.

After getting its arms around core traffic and Web site performance metrics (enabled largely by its switch to a reporting system from Omniture), Lenovo’s Web marketing team is now is trying to work in more qualitative measures, such as customer satisfaction (using tools such as BizRate and Zoomerang) and what Churbuck calls “blog sentiment” — what customers are saying about the brand online.

“The biggest challenge is in the squishy metrics — trying to see, for example, if gross mentions of Lenovo constitute success,” he says.

Yahoo! is adjusting its approach similarly. Over the past year-and-a-half, the company has been upgrading its tracking systems to focus less on product-specific measurements and more on audience-related activities. “The value to Yahoo! is not its products, but its customers,” says Besbeas. “We’re trying to think of the consumer in a more holistic way by looking at the things they want and how we serve them.”

New metrics such as Net Promoter — a measure of customer experience that Haefling’s team at KeyCorp added to its metrics mix this year — are giving companies a fresh perspective of their marketing spend. The ability for marketing organizations to work these new types of metrics into their performance-measurement systems — and use them to help draw a straight line between their programs and revenues — will go a long way toward establishing their authority as a growth driver.

“There’s still some credibility work we need to do,” Haefling admits. “But the last year has been a turning point. Being able to help the LOBs make strategic tradeoffs with the information we provide will help us a lot this year. They believe the numbers more because we got tighter in our reporting.”

The bottom line for marketing teams: Stay nimble. “We see this as an ongoing process of constantly tuning the dashboards,” says Churbuck. “You can’t just build it once and forget about it.